Research in Urban Economies: Why Policy should be Tailor Made for Individual Cities – by Peter Kresl

“Now is the time for the cities!” Such was the declaration of the Eurocities Manifesto of 2002, thus marking the transition from a global economy dominated by nations to one in which cities and urban regions have come to be of primary policy interest. In the new Handbook Of Research Methods And Applications In Urban Economies, two dozen researchers examine aspects of research approaches to the study of this emerging policy interest, how this differs among cities on different continents, the relationship of individual cities to the global and to their more immediate economic environments, and the nature of their internal structures.

Several important factors have conspired in recent decades to put cities, or urban areas, at the center of the study of competitiveness:

The first is the data with regard to city population. In 2012 the United Nations reported that there were 841 cities in excess of 500,000 inhabitants, 223 in excess of 2 million and 26 ‘mega-cities’ with populations greater than 10 million. Currently, 74% of residents of developed countries live in cities while in developing countries 44% do. By 2020 it is estimated that 70% of the world’s population will reside in cities. While definitions of various urban structures differ among countries, there can be no doubt that both society and the economy have, to use Henri Lefebvre’s words, “been urbanized”. Policy initiatives must be undertaken where people live, and this is increasingly in cities.

The second is that fact that while just 25 years ago the focus was on national competitiveness, since that time nations have been stressed from forces above and below. Fiscal difficulties arising from political ideology have diminished their fiscal capacity to act to enhance competitiveness and have, for many, generated a condition of fiscal crisis. At the same time, initiatives to liberalize the policy environment which regulates the international movement and control of goods, services and factors of production has caused the policy control of nations to transfer upward to international organizations (such as the World Trade Organization and the International Monetary Fund), to regional arrangements (such as the European Union and the North American Free Trade Agreement), and to sectoral regulatory bodies that govern financial institutions, working conditions, product quality, and so forth. National governments are today less able to implement policies that enable them to manage their own economies.

The third is the exponentially increasing speed of technological innovation and progress in production, transportation, and communication that leaves national governments in a posture of ‘catch up’ with transformations which they are late to comprehend and with slow moving legislative structures that leave them incapable of effective response. The developments in the area of finance are the clearest indication of the inability of national governments to introduce effective policies in a timely manner.

The fourth is the continual search that is conducted by firms for the combination of local assets that makes their operations most productive and that motivate relocation of various facilities from one site to another. These assets include: the skills of the labor force, urban amenities, educational and cultural institutions, transportation and communications capacities, effective governance and regulation, reasonable taxation, and so forth. All of these are largely, if not exclusively, provided for by local government. The result is that the city has become the focal point for policy to enhance competitiveness not only of regions and nations, but also of firms.

The fifth aspect arises from the fact that during much of this period of growing attention on urban economies, size has captured the attention of many researchers. Sassen’s The Global City focused on three large and dominant cities, London, New York and Tokyo–dominant because of their leadership function in the global economy. Since then pure size has been emphasized–’world cities’ and ‘mega-cities’ are the two most used appellations–even though many of these cities are too congested, polluted, too socially segregated, and too administratively dysfunctional to be either sustainable or models for other cities. Overlooked in this fascination with largeness is the vitality and competitiveness of smaller cities and even towns. When we seek out cities that are worthy of admiration and even of emulation the focus should always be on the city’s assets, its quality of life, the effectiveness of its governance, the coherence and relevance of its ‘vision’, and the quality of leadership in both the public and the private sectors. A smaller city with one or two high quality universities, with urban amenities, good recreations options, and with first rate housing, communications and transportation has far more to offer for study and for emulation than do the majority of our largest cities.

The principle issues with which local leaders must deal include local governance, competitiveness enhancement, charting a course for the future, demographic issues, and the methodologies that one uses in confronting these issues. As our experiences of cities in Asia, Latin America, North America, Africa and Europe have shown, the continued relevance of nations is in the definition and maintenance of distinct local cultures and values that force cities in each nation to study the best examples of actions and initiatives taken in other cites but also to shape them so they conform with local capacities and aspirations. Hence, there is no one approach that is suitable for all cities, and efforts to introduce policies or to improve local economic performance must start at the bottom, grounded in the local culture, and work their way up through local structures.

One conclusion that has come from the recent study of urban economies is a truth that many, although not all, specialists have come to realize – there is no one set of policies or one strategic objective that is appropriate for all cities, or even for cities of the same size and roughly the same situation. Policy must be tailor made for each individual city; policy that accepts and builds upon that city’s ideosyncracities.

Taos City, New Mexico: population 5,716 Photo: Peter Kresl

This should be clear to the reader from a simple glance at the three cities that are pictured in this commentary–Mexico City, Pittsburgh and Taos. Each has the need to enhance its competitiveness, to establish effective governance, to develop its assets and to work to reduce problem areas such as social exclusion, congestion, pollution, public security, and so forth. But each must do its own analysis, chart its own path and implement policies that are most effective given its specific situation. It is our hope that the contributions in the Handbook Of Research Methods And Applications In Urban Economies (published this year by Edward Elgar Publishing) will be of assistance to city leaders in this process.

Peter Karl Kresl is Charles P. Vaughn Professor of Economics (emeritus), of Bucknell University (USA). He has been visiting professor at several universities in Canada, the US, and Europe, has been a Fulbright lecturer and participant in several OECD conferences and is recipient of the Donner Medal for Canadian Studies. He has published many article and books on Canadian-US economic relations, the European Union and, for the past fifteen years, urban competitiveness. He currently serves as president, and co-founder, of the Global Urban Competitiveness Project, based in Beijing.